Putin Wants to Use Cryptoruble to Evade Sanctions But Bank of Russia Skeptical

Russia’s president Vladimir Putin has reportedly commissioned work to create a cryptocurrency as a tool to circumvent international sanctions. His economic adviser explained that “no mining is possible” for the cryptoruble. Meanwhile, the country’s central bank and finance ministry have expressed skepticism about this “cryptocurrency.”

Cryptoruble to Help Circumvent Sanctions

Sergey Glazyev.

Putin is reportedly exploring ways to create a cryptocurrency that can help the country circumvent western sanctions. The Financial Times reported Moscow officials saying that Putin “has commissioned work on establishing a cryptocurrency.” Sergey Glazyev, an economic adviser to Putin, described at a recent government meeting that “a cryptorouble would be a useful tool to get around international sanctions,” the publication added and quoted him saying:

This instrument [cryptoruble] suits us very well for sensitive activity on behalf of the state. We can settle accounts with our counterparties all over the world with no regard for sanctions.

He added that this new currency would be “the same rouble, but its circulation would be restricted in a certain way,” thereby allowing the Kremlin to track its every move, the news outlet noted.

First Proposal of Cryptoruble

Nikolay Nikiforov.

In October 2017, Putin ordered the creation of Russia’s national cryptocurrency, largely referred to as the cryptoruble, as news.Bitcoin.com previously reported.

The Minister of Communications and Mass Media, Nikolay Nikiforov, subsequently submitted the first proposal of this new currency a week later. “These are technological proposals,” he said at the time without elaborating on the details.

In November, Deputy Finance Minister Alexei Moiseev hinted that the proposed cryptoruble may not be an actual cryptocurrency, suggesting that its name should change from cryptoruble to cyber-ruble.

Glazyev’s Version of Cryptoruble

Last month Glazyev independently proposed his version of the cryptoruble and suggested using for settlements between the state and corporations. He told Kommersant that the cryptoruble will be issued by the authorities and that “no mining is possible,” adding that:

It’s just a decision of the authorities to issue a non-cash form of a discrete stream of monetary units… The digital ruble guarantees us full protection – from fraud, from theft…Wherever there is a demand for the targeted use of money, be it government spending, budget investment, the work of banking structures and corporations, it can be applied.

No Support from Central Bank and Finance Ministry

While Glazyev is a proponent of creating the cryptoruble as soon as possible, the finance ministry and the Bank of Russia are skeptical. Each has stated they do not see a need for the cryptoruble.

During the meeting where the bill for the regulation of cryptocurrencies and initial coin offerings (ICOs) in Russia was presented, Moiseev said the ministry of finance is in no hurry to create the cryptoruble. Last week, Interfax quoted him saying:

To be honest, I do not even understand what a cryptoruble is…I understand what an electronic ruble is. I understand what ‘a Yandex-purse’ is … If you declare that we renounce the constitutional principle that the issue is produced by the central bank, then, of course, we can make a cryptoruble.

Olga Skorobogatova.

Meanwhile, the central bank’s first deputy governor Olga Skorobogatova said that the bank “does not think this [cryptoruble] is advisable from the point of view of the macroeconomics of the population.”

However, she revealed that the bank is considering “a supranational digital currency within the BRICS or the Eurasian Economic Union (EAEC).” According to her, the Bank of Russia believes that:

The issue of a common cryptocurrency for a number of countries is very promising, more than that for a single nation.

What do you think the final form of the cryptoruble will be? Do you think it will be good for the crypto community? Let us know in the comments section below.

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Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

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